{"id":7120,"date":"2025-05-12T03:14:58","date_gmt":"2025-05-12T03:14:58","guid":{"rendered":"https:\/\/sblog.seebiz.com\/blog\/?p=7120"},"modified":"2025-05-12T03:14:58","modified_gmt":"2025-05-12T03:14:58","slug":"procurement-and-supply-chain-management","status":"publish","type":"post","link":"https:\/\/sblog.seebiz.com\/blog\/procurement-and-supply-chain-management\/","title":{"rendered":"How Procurement and Supply Chain Management are Related – From Difference or Similarity?"},"content":{"rendered":"

\u201cWe need a frictionless supply chain.\u201d<\/span><\/p>\n

\u201cWe have to optimize our supply chain management.\u201d<\/span><\/p>\n

\u201cWe have to procure these supplies.\u201d<\/span><\/p>\n

If you have a business, you might be very much aware of these rants.\u00a0<\/span><\/p>\n

In reality, these are not just rants but some of the most important parts of running a business. But some might think that <\/span>procurement and supply chain<\/b> management<\/b> are either the same or very different.\u00a0<\/span><\/p>\n

They are neither the same nor very different. Still, they are related to each other in such a way that the entire input (identifying and supplying products) and output (manufacturing, logistics, end product) of any business depend on both.\u00a0<\/span><\/p>\n

Let\u2019s find out the major <\/span>procurement and supply chain<\/b> management<\/b> roles for a business.\u00a0<\/span><\/p>\n

Where do they overlap to make business decisions and operations smoother and finer?\u00a0<\/span><\/p>\n

And how businesses can see up to a 20% reduction in operational costs by simply integrating both.<\/span><\/p>\n

What is a Supply chain?<\/span><\/h2>\n

A supply chain is a complete cycle and an interconnected network of people, organizations, resources, and activities (Logistics) responsible for the complete product life cycle, from acquiring raw material to delivering the final product to the end consumer.\u00a0<\/span><\/p>\n

\"procurement<\/a><\/p>\n

Source<\/span><\/a><\/p>\n

What is Supply chain management?<\/span><\/h2>\n

Supply chain management is a complete process of managing the supply chain from sourcing to manufacturing, storage, transportation and distribution. In short, from the point of origin of the products to the point of consumption, supply chain management handles all.\u00a0<\/span><\/p>\n

These are the components that make a complete SCM process.<\/span><\/p>\n

Planning:<\/b> Forecasting demand and aligning resources accordingly.<\/span>
\n<\/span>Sourcing:<\/b> Procuring raw materials and components.<\/span><\/p>\n

Manufacturing:<\/b> Transforming raw materials into finished products.<\/span><\/p>\n

Logistics:<\/b> Managing transportation and warehousing.<\/span><\/p>\n

Returns Management:<\/b> Handling product returns and recycling.<\/span><\/p>\n

\"procurement<\/a><\/p>\n

Source<\/span><\/a><\/p>\n

What is <\/span>procurement?<\/span><\/h2>\n

Procurement is the process of acquiring goods and services from suppliers. It starts when a person or a department identifies the need for a product or service and ends with acquiring that product or service.\u00a0<\/span><\/p>\n

The procurement process moves like this;<\/span>
\n<\/span><\/p>\n

Identifying needs <\/span><\/i>\u2192 <\/span><\/i>Selecting suppliers <\/span><\/i>\u2192 <\/span><\/i>Negotiating contracts <\/span><\/i>\u2192 <\/span><\/i>Managing purchase orders.<\/span><\/i><\/p>\n

\"procurement<\/a><\/p>\n

Source<\/span><\/a><\/p>\n

To study the procurement or procure-to-pay process in detail, <\/span>read this<\/span><\/a>.<\/b><\/p>\n

The <\/span>procurement process <\/span><\/a>fulfils any business’s product need, making it a subset and a part of the supply chain. Supply chain management is much broader. It basically starts from acquiring goods and then moves further into product manufacturing, distribution, and so on. The interesting part is that businesses that integrate both and make informed decisions can see a <\/span>15% improvement in supplier performance.<\/span><\/a>\u00a0<\/span><\/p>\n

What are the major differentiators between procurement and supply chain management?<\/span><\/h2>\n

While dividing tasks between departments, have you ever considered which team should manage inventory? A supply chain department or procurement department? If you still do not get the answer, let me explain further.<\/span><\/p>\n

Let\u2019s suppose you own an automobile business. You find a wholesale supplier in China that deals in automobile parts. Procurement involves identifying needs (that you need automobile parts) and placing an order. After that, the work shifts to the SCM department, which will make sure the product arrives on time (manage logistics), is stored properly, reaches manufacturers, and then delivers the end product to the customer in time.\u00a0<\/span><\/p>\n

Now are we clear?<\/span><\/p>\n

To answer the above question: Procurement might plan the inventory, but SCM will manage it.\u00a0<\/span><\/p>\n

Difference between the main goals of procurement and SCM<\/b><\/h3>\n

Procurement<\/b> focuses on:<\/span><\/p>\n